Backers of startups worldwide are looking for the next “disruptive trend” that can overturn industries. Ironically, the venture capital industry has begun to resemble markets that investors themselves are looking to disrupt.

Speculation about the “next dot-com bubble” abounds weekly; entrepreneurship champion the Kauffman Foundation reflected upon two decades of investing venture capital by saying, “we have met the enemy…and he is us.” Is the venture capital industry an old-school, over-priced industry that doesn’t necessarily deliver results?

[blockquote author=”” pull=”pullleft”]What if a great entrepreneur doesn’t know anyone who knows smart guys with cash?[/blockquote]

For venture capital to truly improve the world, venture capital needs to innovate as much as the companies it backs. From our post at Village Capital, we’re seeing hundreds of new investment approaches and tens of thousands of entrepreneurs. We’re excited about three trends that are beginning to challenge venture capital — in a good way.

Real-World Impact

An Economist cover story celebrated Silicon Valley’s place as the new center of American capitalism, but one that faces an existential challenge: “The geeks live in a bubble that seals off their empire from the world they are doing so much to change…” Most technology startups remain relevant only to the best-off in society, leaving out billions of people and trillion-dollar markets.

Yet, at the same time, we are seeing enterprises that affect the everyday lives of the majority attract more engaged employees, develop more motivated customers and — because of venture capital aversion — get better valuations for investors. Real-world impact then is a positive both for the entrepreneur and the investor.

Stellar venture firms recently launched, such as Core Innovation Capital, DBL Investors and Owl Ventures, are early pioneers of this approach, backing companies in financial services, food and education — and delivering strong returns as a result.

And with big financial institutions such as Bain Capital hiring former Massachusetts Governor Deval Patrick, and Goldman Sachs acquiring impact advisory firm Imprint Capital, we are seeing investors who prioritize sectors that make a real-world impact increase their bottom lines.

Rise Of The Rest

Talent is universal, even if opportunity is not. Seventy-five percent of startup investment in the U.S. goes to three states — New York, California and Massachusetts — yet the most innovative investors worldwide believe that entrepreneurs are building great companies everywhere.

AOL founder Steve Case and his firm Revolution launched an initiative, “Rise of the Rest,” to highlight startups in overlooked cities. A bus tour through 14 cities to date has invested in promising startups whose cities have a competitive edge.

Iowa City’s Pear Deck is building on local assets in testing (remember the Iowa Test of Basic Skills?) to create the next generation of student assessment, and New Orleans’ GoToInterview takes advantage of the Big Easy’s bulk of hospitality workers to create a more inclusive hiring process for minimum-wage staff. Both founders cite unique competitive advantages in their hometowns.

Startups outside the traditional bulls-eye locations of venture firms have better valuations for investors, lower costs for management and often have entire communities rallying around their success. Investors willing to go off the radar of normal investors are gaining a competitive advantage — and they’re creating a balanced, successful economy in the process.

Inclusive Entrepreneurship

If entrepreneurship is going to change the world, it must include everyone. Unfortunately, today, the majority of the funding community does not reflect that view. Less than 10 percent of U.S. venture capital goes to women-run companies, and less than three percent goes to under-represented minorities. Very little of this is intentional, but Paul Graham, founder of Y Combinator, reflects sincere self-awareness when he says, “I can be tricked by anyone who looks like Mark Zuckerberg.”

Mark Zuckerberg is an exceptional leader, but the next great company’s founder may not necessarily look like him. Tony Aguilar, the Latino founder of Austin-based Student Loan Genius, graduated college with $100K in debt — and has started a company that helps employers offer student loan forgiveness as a competitive advantage (similar to 401ks). In his first year, he has more than a million employees eligible.

Why are diversity numbers in entrepreneurship so poor? Investors cite a “pipeline problem.” Yet the average firm’s funding strategy is: “smart guy (and yes, it’s almost always a guy) with cash finds company and convinces partners it’s a good deal,” and the recommended way to pitch is a “warm introduction from someone we know.” What if a great entrepreneur doesn’t know anyone who knows smart guys with cash?

Overcoming even unintentional biases against industries, geographies and backgrounds requires different approaches. Freada Kapor Klein and Mitch Kapor recently announced $40 million in intentional investments in under-represented minority groups; Gallup is testing every high-schooler in Lincoln and Detroit to find candidates, regardless of background, who have entrepreneurial skills; and at our firm Village Capital, we invest in companies through a peer selection methodology in which entrepreneurs evaluate their peers to decide our funding.

The Future Of Venture Capital

Venture capital has built iconic companies, and delivered outstanding value for a handful of people in a select few cities. Yet great entrepreneurs everywhere want to build a more inclusive, balanced and relevant economy — and they have the potential.

We predict that the venture capitalists who are ahead of the curve on industries, geographies and the backgrounds of founders will build the economy we want — and realize tremendous success in the process.

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This post originally appeared on TechCrunch. Reposted with permission of the author.